Phillip Hammond urged to end pay cap that "has cost civil servants £3,400 each"

Written by Suzannah Brecknell on 6 March 2017 in News

Continuing pay cap would mean up to 20% drop in average civil service earnings by 2020, union analysis reveals

Average civil service pay has fallen by up to 9% in real terms over the past six years, according to analysis carried out for the PCS union, which is urging the chancellor to lift the public sector pay cap introduced in 2010.

Hammond's predecessor George Osborne froze pay right across the public sector when he took office in 2010, with a 1% cap on payrises in force since 2012 and currently scheduled to remain in place until at least 2020.

Analysis carried out for PCS by Dr Mark Williams, lecturer in human resource management and employment relations at the University of Surrey, warns that if Hammond does not lift the public sector pay cap, real civil service wages will have fallen by 12% on 2010 levels by the end of the parliament.

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The analysis shows that civil servants are already in a worse position than other public sector workers, as, across the wider public sector, wages have fallen by around 4% since 2010.

And a civil servant earning the average wage would have "lost" around £3,430 between 2010 and 2016, compared to what they would have earned had pay risen in line with CPI – the government’s preferred measure of inflation.

The real terms fall is even more stark if RPI is used to measure inflation. By this measure, a civil servant earning an average wage "lost" £7,768 between 2010 and 2016 thanks to pay restraint, and average wages will drop by 20% by 2020 if the pay cap is not lifted.

Launching the study, PCS general secretary Mark Serwotka said: “The government’s rhetoric on wanting to help ‘just managing families’ rings hollow when it comes its own workforce who are struggling to get by on ever diminishing salaries.

“The chancellor has an opportunity in the Budget to lift the 1% cap and allow government departments to end the blight of low pay and put money back into the pockets of dedicated public servants who work hard to provide the services we all rely on.”

The analysis also suggests that the loss of earnings has actually been greater than these numbers show, because the fall in wages is partly offset by the fact that the civil service has a greater proportion of staff in senior roles than in 2010.

Several rounds of redundancies and headcount reductions have seen more jobs lost in lower-paid administrative grades – recent IfG analysis showed that 38% of civil servants are now working in the most junior grades, compared to 47% in 2010.

The PCS calculates that if the composition of the civil service had not changed between 2010 and 2015, the average wage would have been approximately £2,000 lower in 2016.

It also finds that if wage cuts had not happened, but job cuts had gone ahead, the average civil service wage would actually be higher now than in 2010, thanks to the rising proportion of staff in senior grades.

Williams' research draws on ONS data from both the Annual Civil Service Employment Survey (ACES) and the Annual Survey of Hours and Earnings – a survey which employers are mandated to complete and which allowed him to accurately compare earnings both across private and public sectors and also within the public sector.

Using the ACES data, Williams was able to compare changes in average earnings within different grades. He found that staff in grades 6 and 7 lost on average around £20,000 of earnings between 2010 and 2016, while senior and higher executive officers lost around around £13,000.

Executive officers lost £12,000 over the same period, while administrative officers lost around £3,500.

Although the report does not cover the impact on the senior civil service, Williams told CSW that he had found losses for these grades to be “at least as severe” as those for grades 6 and 7.

Williams also analysed the impact of gender on pay, and found that the gender pay gap in the civil service decreased by 11 percentage points from 2007 to 2016.

He also found that this gap – which currently stands at 86% – is in part due to the low proportion of women in higher paying grades at the top of the civil service.

“The differing female-male ratios across grades likely accounts for the gender pay in overall median earnings,” the report says, “since the gap in median pay between males and female within grades is close to zero in most grades.”

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Suzannah Brecknell
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Suzannah Brecknell is CSW's senior reporter. She tweets as @SuzannahCSW

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Nic (MoJ) (not verified)

Submitted on 6 March, 2017 - 14:59
We have two hopes....... Bob Hope and No Hope

David Davis (not verified)

Submitted on 6 March, 2017 - 14:59
Phillip Hammond would rather publicly emasculate himself, than hand Civil Servants a pay raise at the behest of Mark Serwotka.

Left PCS (not verified)

Submitted on 7 March, 2017 - 09:54
Mark Sewotka is a key part of the problem. Ask yourself these questions: 1) What were your t&Cs before Sewotka and his leadership team 'led' the union? 2) What was your relative pay level before Sewotka and his leadership team 'led' the union? 3) How many people do you personally know who lost their jobs since Sewotka and his leadership team took over? 4) What was the value of their redundancy payments? Would they have been more, the same or less since Sewotka and his tem took over? 5) Despite all the job losses, are there more, the same or less people crammed into your building since Sewotka and his team came into post? 6) Are any or all the issues important to you? 7) Do you think they are the most important issues to Sewotka and his leadership team? 8) By ANY measure, in ALL the time Sewotka and his leadership team have been in post, do you think they have delivered? 9) Do you think you have got value from your union and do you think Sewotka and his leadership team value you? 10) Why are you continuing to pay PCS your hard earned money?

Anonymous (not verified)

Submitted on 7 March, 2017 - 22:03
completely agree. PCS are just as complicit as the Exec team and politicians.

Big Red Dave (not verified)

Submitted on 7 March, 2017 - 23:29
Ask yourself this question - Why are you blaming Mark Serwotka and PCS for these changes? Take your anti-union agenda and peddle it elsewhere....

Left PCS (not verified)

Submitted on 9 March, 2017 - 14:28
I have no anti-union 'agenda'. I was in the Union and have suffered through an badly handled MOG and delays in pay settlements that are still ongoing. PCS were fully aware of this, but we wouldn't know who in PCS is supposed to be fighting our corner if we tripped over him/her. I'm asking people to question what has been achieved by Serwotka and his team? Successive governments have been ripping away our rights and our benefits and the PCS leadership have achieved nothing. I'm sick of PCS and the ridiculous battles it chooses to fight at the expense of what really matters.

Anonymous (not verified)

Submitted on 8 March, 2017 - 08:28
I left the Union as soon as I saw that they were more interested in headlines and big stories than looking out for people pay in and then genuinely need their help

Simon Watson (not verified)

Submitted on 6 March, 2017 - 20:43
Did the analysis take into account the crippling extra pension contributions Civil Servants have been forced into making for a lesser pension.

Phil C (not verified)

Submitted on 7 March, 2017 - 13:14
In my view, the Government is very unlikely to abandon its pay cap policy in this Parliament; the Tory Party may perhaps indicate a more relaxed approach to public sector pay as part of its manifesto pledge for the 2020 general election but I would put this at no more than a 50/50 bet at the moment. What is much more likely to have an effect is market forces. Keeping pay pegged below inflation indefinitely will eventually produce several things: the more talented personnel will leave early in search of better paid jobs; those that remain will mostly be those nearing retirement and many of those will be leaving in the next few years, and finally, starting with the more specialist roles but gradually spreading to the whole civil service will be the inability to recruit and retain staff. At the moment the Government is hell bent on reducing the size of the civil service, so is not particularly worried about loss of staff. However, there will be a point when pay cap policy will have to change. The question is: when?

Soon to be ex P... (not verified)

Submitted on 7 March, 2017 - 14:03
I completely agree Phil C, but the follow up questions surely are - 1. What will PCS and Prospect do if Mr Hammond does not give Civil Servants a 5% pay rise? 2. How will the Civil Service recruit and retain specialists? 3. How will the Civil Service meet its targets with a demotivated and 30% smaller workforce? 4. Why do need more senior civil servants when the staff numbers are being cut?

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